Top 10 Business Events in 2010

 

ASEAN-BIS 2010 with the theme of "Towards the ASEAN Community: From Vision to Action" was held in late October on the sidelines of ASEAN Summit 2010. This was a meeting place for businesses to learn more about major global and regional trends from direct dialogues with government officials and business leaders. Many ASEAN businesses succeeded in seeking out business and investment partners at this event.

 

At ASEAN-BIS, Vietnam proposed the establishment of ASEAN investment and trade promotion centres in member countries to create a trade and investment promotion centre network to boost trade and investment within ASEAN and with partners. Also, Vietnam actively proposed strengthening the harmonization of trade exchange and customs procedures among ASEAN countries, proposed measures to support the development of SMEs in ASEAN, fortifying industrial links and service links. In addition, Vietnam proposed enhancing the role of representatives of ASEAN business communities, strengthening the role of ASEAN chambers of commerce, establishing value chains and ASEAN brands.

 

One of Vietnam’s important recommendations is to boost government - business dialogues, including accelerating the implementation of the public private partnership (PPP) mechanism in major projects and programmes in ASEAN member countries.

In conjunction with the 17th ASEAN Business and Investment Summit 2010 (ASEAN-BIS), the ASEAN Business Advisory Council (ASEAN-BAC) granted the ASEAN Business Award (ABA) to the eight Most Admired ASEAN Enterprises. Two Vietnamese companies are among the winners, namely Southeast Asia Commercial Joint Stock Bank - SeABank and Thu Duc Housing Development Corporation.

The Vietnam Chamber of Commerce and Industry (VCCI) and the business community officially launched the Vietnam Business Council for Sustainable Development (VBCSD) in December 2010.

 

The council is jointly chaired by Dr Doan Duy Khuong, VCCI Vice President, and Mr Gary Schutz, CEO of Holcim Vietnam Ltd. Many founding members are large companies in Vietnam and foreign countries like Holcim Vietnam, Unilever, Shell Vietnam, APCO, Rolls-Royce Vietnam, Vietnam National Coal - Mineral Industries Group (Vinacomin) and FTP Corporation.

 

The overall mission of the council from now to 2020 is to build a sustained and dynamic Vietnamese business community to successfully integrate in the 21^st century, and contribute to national economic development, social progress, poverty reduction, environmental protection, and sustainable development of the country.

 

In addition, VBCSD is a bridge that links government agencies and businesses to convey information and business feedback. Besides, strengthening the advisory role and policy recommendation is also an objective of VBCSD.

 

Vietnamese Prime Minister Nguyen Tan Dung signed a decision approving the restructuring of Vinashin. The reshuffle duration will run from 2011 through 2013.

Accordingly, Vinashin will focus on three core fields: shipbuilding and repairing at an appropriate scale, supporting industries for shipbuilding and repairing; and human resource training for shipyard workers.

 

The restructuring came after this group was overloaded with debt. Under the restructuring scheme, several companies and branches will be transferred to the Vietnam National Oil and Gas Group (PetroVietnam) and the Vietnam National Shipping lines (Vinalines).

As of June 2010, Vinashin's total debt was VND86 trillion (US$4.3 billion), of which VND45 trillion was long-term debt and VND14 trillion was currently due debt. In total, the payable debt was 11 times larger than the owner’s equity, sending the shipbuilder to the verge of bankruptcy. However, this group did not honestly report its situation, falsifying a profit of VND750 billion in 2009 and nearly VND100 billion in the first quarter of 2010.

The topic of raising the required authorised share capital of credit institutions to VND3,000 billion before December 31, 2010 (according to Decree 141) remained a hot issue. On May 20, 2010, the State Bank of Vietnam (SBV) issued Circular 13 to raise the capital adequacy ratio (CAR) from 8 percent to 9 percent from October 1, 2010.

To ensure the required CAR, credit institutions must increase capital and/or reduce outstanding debts and increase safer assets, and/or decrease investments.

 

The 1 percent increase of the capital adequacy ratio is not a concern for large commercial banks because their CAR is usually 8-11 percent. But, this upset small banks because they, at that time, were striving to meet the required registered capital. Thus, raising the CAR by 1 percent means that they have to increase the owner’s equity. Difficulties doubled for small banks.

 

The rise of registered capital to VND3,000 billion became more difficult towards the end of 2010 because the capital supply fell short. To deal with the problem, SBV asked the Government to extend the deadline for recapitalisation of credit institutions. In mid-December, the Prime Minister approved of extending the deadline until December 31, 2011.

In the consumer guide for aquatic products in 2010 - 2011, the World Wildlife Fund (WWF) added the Vietnamese tra fish (pangasius) to the Red List, primarily because of culturing environment, food, chemicals and medicine ‘problems’.

 

Immediately, the General Department of Fisheries, the Vietnam Fisheries Association (VINAFIS) and the Vietnam Association of Seafood Exporters and Producers (VASEP) protested the hasty, unscientific and groundless decision by the WWF. Parties involved joined a dialogue with WWF international delegation led by Mr Mark Powell, who was in charge of WWF global fisheries, to review WWF’s evaluation and conclusion results on Vietnamese tra fish. Mr Mark Powell admitted mistakes and pledged to “correct” the incident by crossing the Vietnamese fish off the list and encouraging European people to continue buying the fish.

 

Not only that, the Vietnamese shrimp was also attacked. The US Department of Commerce (DOC) continued to applying antidumping duty on some types of Vietnamese frozen shrimp. Clean exporters were levied the lowest rate of 4.3-5.24 percent, but accused exporters were subjected 25.76 percent. Vietnam can change the tax in the next five years.

 

VASEP is working to counteract adversarial decisions on Vietnamese aquatic products.

Police decided to prosecute Mr Le Van Dung, General Director of Vien Dong Pharmaceutical Joint Stock Company (stock ticker: DVD) and accessories in November 2010 for the act of manipulating prices of shares of Ha Tay Pharmaceutical Company (ticker: DHT).

 

This was the first time the charge of manipulating securities prices was brought to the criminal process. Before that, many stock price manipulations were found but violators were imposed administrative fines only - not strong enough to end the behaviour. Thus, this case received the support from market regulators and authorities in a bid to regain investor confidence. In addition, Decree 85/CP on administrative fines on securities violations dated August 2, 2010 also increased fine levels by 4-6 times and allowed the confiscation of all illegal earnings.

 

The stock market slumped in 2010, sending the market value of hundreds of stocks to the par value, or even lower. This enlivened the merger and acquisition (M&A) activities on the stock market. For instance, Hung Vuong Corporation (ticker: HVG) - a seafood company - acquired An Giang Fisheries Import & Export Joint Stock Company (ticker: AGF); Phu Nhuan Jewellery Joint Stock Company (ticker: PNJ) took over Saigon Fuel Joint Stock Company (ticker: SFC); and Thanh Cong Production and Trading Joint Stock Company purchased 2.24 million shares in a public offering of Ninh Hoa Sugar Joint Stock Company (ticker: NHS). Most recently, Binh Thien An Real Estate Company and other companies acquired Descon Construction Corporation (ticker: DCC).

Allowing companies to print invoices is part of Project 30 on public administration reform, but it was a highlight in 2010.

 

This was a real turning point in tax procedure administrative reform. Under new regulations, all enterprises are entitled to print and use their own invoices, lifting a time- and money-consuming activity from the companies, particularly large concerns.

To date, the business community is ready to print and use self-made invoices. Although there are some technical problems due to printing overload or unfamiliar use, the activity is very impressive.

Many FDI projects with registered investment capital of multiple billions of US dollars had their licences revoked due to financial shortage, after the Ministry of Planning and Investment in Vietnam assigned local authorities to review the implementation of FDI projects with registered capital of US$1 billion or more. This was a warning to foreign investors carrying out projects and was the basis for authorities to closely review the licensing and assessment of investment projects.

 

Quang Nam province withdrew licences from three FDI projects, including US$4.15 billion Dragon Beach invested by Tano Capital, LLC and Global C&D Inc. (USA); Pegasus Fund luxury ecological sea tourism project invested by US investors; and Que Viet tourist site project invested by Canadian investors.

 

Ba Ria - Vung Tau province signed a decision to terminate operations and withdraw the investment certificate of a US$200 million real estate project invested by AJ Vietstar Construction and Development Co., Ltd (South Korea). Khanh Hoa province also revoked the investment certificate of the US$500 million STX Vina Heavy Industries Complex invested by STX Group (South Korea). Phu Yen province also withdrew the investment certificate of the US$11.4 billion South Tuy Hoa Creative City invested by Galileo Investment Group (US).

Until now, the 336-metre Keangnam Hanoi Landmark Tower on Pham Hung Street (Hanoi) is described to be the tallest tower in Vietnam and the 17th in the world with 70 floors. The tower was kicked off in November 2007 and will be put into use in 2011.

A PetroVietnam company has announced plans to build a 102-storey tower at a cost of US$1.2 billion. The 528-metre tower would be the tallest in Vietnam and the second in Asia. Shortly thereafter, Kinh Bac Group declared its intention to build a 100-storey skyscraper on Pham Hung Street, Hanoi.

 

Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) started construction on an office, hotel, shopping centre and serviced apartment complex on 3 hectares in Ciputra urban zone (Hanoi). The US$400 million project includes a 68-storey tower and a 48-storey tower.

In July 2010, satellite digital television channel K+ managed by VSTV – a joint venture between VTV/VCTV Television and Canal +/Canal Overseas – claimed to have exclusively copyrighted television broadcast of seven major football leagues in the world.

To watch K+ channels, viewers must, first of all, purchase a K+ decoder at VND1.5 million. Then, they must choose one of three service options: Access (more than 31 channels) at a subscription fee of VND330,000 for six months; Family (more than 57 channels) at a charge of VND630,000 for six months; or Premium (more than 70 channels) at a charge of VND1.53 million for six months. To watch the K+1 channel, viewers must choose the Premium service package, which requires an initial investment of VND3 million or so. This investment is rather large and hardly feasible for the majority of Vietnamese people.

 

TV viewers were upset because national broadcaster VTV, which holds a majority stake in VSTV, is tasked to serve information and entertainment needs of the people but it counters the interests of the masses. This matter peaked when the Vietnam [Football] Supporters Club collected 1 million signatures and sent a request against the exclusivity to the Prime Minister.

 

Then, K+ confirmed that it had reached an agreement with other broadcasters, allowing them to relay the Premier League on a digital television channel and IPTV channel provided by FPT Corporation. However, viewers will have to pay an additional fee to watch football matches on these channels.